How To Make Your Ohio Business Safe With Commercial Insurance

Do you own a car or a home? If you have either of those assets, then a personal insurance policy is likely a familiar matter.

Nearly everyone purchases an auto or home insurance. However, an Insureon poll has uncovered a staggering statistic: Out of all small business owners who took the survey, only 28% have a business liability policy.

We are talking about the business that you poured your blood, sweat, tears, and funds into to make it what it is today. If you leave it unprotected, a series of losses or one significant loss can bring everything to a screeching halt.

An appropriate insurance policy will shield you from the potentially devastating financial consequences of a loss. The secret is to know your business risks and select insurance policies that fit your unique business.

In this article, we'll discuss why business liability insurance is a powerful tool to leverage the risk of doing business as well as what you can do to save on insurance without compromising on critical coverages.

So without further delay, let's talk about how you can make your business safe with commercial insurance.

Why does small business need insurance

Whether you just started your business or have been in business for a while, a budget is likely always at the forefront of your mind.

With a tight budget, it might be tempting to decide against purchasing commercial insurance. After all, who wants to add another expense to their balance sheet?

Unfortunately saving a few hundred dollars now, may mean having to come up with tens of thousands of dollars out of pocket if a loss hits.

A simple claim such as customer slipping and falling on your premises may cause a lawsuit. And we know, how expensive attorneys and lawsuits can get.

An average slip and fall claim costs about $20,000 in legal fees and settlement. Those $20,000 could have been used for a planned expansion, for taking your company in a new direction, for purchasing new equipment, etc.

Instead, not only you need to spend the money but also the time to deal with the attorneys and the lawsuit. So you are spending money you hadn't planned on while not being able to run your business.

Not an ideal situation by any means!

Claim examples

Let's take a look at some claim examples and how an insurance policy would have helped.

A patron is eating a meal with his family in a restaurant when he bites on a piece of glass in his food. The glass injured his mouth and chipped a tooth. The customer sued the restaurant for $10,000 in medical bills

A store employee forgets an opened bottle of chemical cleaner on a shelf after cleaning it. A child accidentally spills the chemicals on herself causing chemical burns. The child's family sues the store for $50,000.

A contractor is renovating a bathroom for a customer. Unfortunately, he accidentally forgets to shut off the water and the bathroom is flooded. The water floods through the floor and causes extensive damage to multiple areas of the house.

A flower shop employee is rushing to make a delivery to one of the customers when they cause a three-car accident on a freeway. All three cars are damaged, and one of the drivers has suffered severe injuries.

A jewelry repair shop is broken into, and valuables are taken. The owners of the jewelry are suing for the cost of their possessions.

A store employee is restocking high shelves while balancing on a ladder. She loses her balance, falls down and breaks her arm. The employee is unable to work and is forced to miss work while she recovers.

These scenarios are far from unrealistic. In fact, these are all real claims, submitted by actual policyholders.

In each of the examples above, an insurance policy would help offset the financial cost to the business by covering the legal fees as well as any settlements or judgments against the insured. Often, you can also get coverage for the "loss of income" that occurred because of the covered loss.

What kind of insurance do I need?

Some are only applicable if you meet certain conditions (i.e., you only need Workers Compensation policy if you have employees) and some offer general protection that every business should have. Below we'll talk about the most common insurance policies for small businesses.

Commercial General Liability - This is the most basic commercial insurance policy that every business should carry.

The policy covers claims made by individuals or entities not employed (i.e., third parties). These claims may include property damage, false advertising, slip and fall, and other injury claims, etc.

This policy also includes medical coverage to cover an emergency room or an ambulance bill for a person injured on your property.

Property - This policy covers the damage to your business property both the building and the contents.

Typically a small business would purchase a BOP or a Business Owners Policy(BOP) that combines both General Liability and Property coverages. Fire damage and theft are the most common claims that are filed under this policy; however, they are not the only ones.

The policy is usually written on an all-risk basis, meaning that all situations are covered unless specifically excluded.

Commercial Auto - Just like a personal auto policy, Commercial Auto covers your company vehicles and the employees driving them. Personal auto policies typically exclude any business use, so if any of your cars are used for business or are registered to the business, this policy is a must.

What if the employees use their own vehicles to drive for business purposes? For example, a sales representative may drive to a client meeting or a conference.

In this case, you will need a Hired and Non-Owned Auto coverage. Often you can add in that coverage to your General Liability BOP or package; however, sometimes the carrier will require a separate policy.

Whether added to liability policy or written as a separate policy, it's critical to be aware of this coverage.

Errors & Omissions or otherwise known as Professional Liability insurance covers your exposure as related to your professional activity.

Many think that any professional claims will be covered under a General Liability policy. This could not be farther from the truth.

So what is the difference?

Unlike a General Liability policy, Errors & Omissions policy protects you from lawsuits where third parties allege financial or other harm from following your professional advice or from professional services that you provide.

An example of an E&O claim is a CPA making a mistake on your taxes causing an audit. Or a personal trainer failing to correct form during an exercise causing an injury.

If your company provides any professional service such as accounting, IT, esthetician and so on, a Professional Liability policy is an important policy to have.

Workers Compensation - We would be remiss if we didn't mention a Workers Compensation policy.

In Ohio, if you have any employees, you are required to carry this policy. It protects your employees in case of a workplace-related injury, sickness or death. Failure to purchase a Workers Comp insurance will result in hefty fines by OSHA.

How to choose the correct coverage?

When choosing your insurance policies, it is essential to consider the unique risks that your business faces carefully. Some of the questions to guide you in the process of selecting appropriate coverages -

What is unique about my industry and business? For example, a restaurant often sells alcohol, so a Liquor Liability coverage is essential. A landscaper might consider adding a Herbicide coverage to the liability policy.

What is the property and equipment used in my business that needs coverage?

Do clients depend on my professional advice?

An experienced insurance broker will be your best ally in selecting just the right coverages for your business. They can suggest companies that specialize in writing policies for your industry, negotiate coverages and premiums and will be there to answer any questions.

How much does insurance cost?

Unfortunately, there is no clear-cut answer to this question.

An insurance rate is comprised of many factors all of which affect it. It all starts with a base rate that the insurance carrier files with the Insurance Department.

We mentioned earlier that a broker would help you find an insurance company that specializes in your industry. The reason it is beneficial is that the base rates tend to be better than their competitors who specialize in other industries.

Once the base rate is established, it is affected either negatively or positively by various factors such as industry, the size of your company (i.e., revenue), number of employees, location, experience, claim history and so on.

Another factor that affects insurance is the limit that you choose for your policy as well as any other additional coverages.

A policy might cost anywhere from a few hundred to a few thousand dollars a year depending on the factors mentioned above.

How to save money on insurance cost

Even though it seems like your premiums are pre-determined, there are a few ways to control your premiums.

Shop around - One of the surest ways to save yourself time and money is to use a broker. Not only a broker will be able to suggest coverages that your business might need but are easy to overlook, but they will also be able to shop around for you.

When you take the first quote that comes your way you may be leaving better coverages and money on the table. A broker will collect all the data from you, and work behind the scenes to gather quotes from multiple carriers.

Beware of policy proposals that seem too good to be true. If a company is offering a policy at a much lower rate than everyone else, it is more than likely that they cut corners in the coverage department offer coverage that is not as broad as you think.

Limits and deductibles - Limits and deductibles affect your policy. The higher the limit and the lower the deductible, the more expensive the policy is going to be.

Conclusion

A failure to purchase commercial insurance can result in a devastating financial fallout, losing what you worked so hard to build.

Even a seemingly simple lawsuit can leave you strapped for cash and struggling to keep your doors open.

Being strategic with your insurance choices helps you get the right coverage while keeping costs manageable. Finding the right insurance broker that you can develop trust and relationship with is key.

A knowledgeable broker will always be there for you to answer questions, point out coverage issues or help you file a claim if need be.

What commercial insurance do you have to help keep your business safe?